EnergyBiz - September/October 2007 - (Page 17) formal electric service and ask them what they would be willing to pay for it. These interviews generally revealed widespread frustration with stealing electricity and a willingness to pay for better service. The quality of service from illegal hookups is, unsurprisingly, very poor and also expensive because the unregulated voltage damages household appliances such as televisions and refrigerators, to say nothing of the danger the illegal power lines represent. Based on a better understanding of what this potential client base represented, AES companies pilot tested many different approaches. For example, in areas with a strong sense of community, group meters were installed and a local leader was selected to manage billing and collections. Prepaid meters were installed and local community service areas, including those of NGOs, were used to sell prepaid cards. School buses were outfitted and sent to local schools to explain safe use of electrical wiring and distribute electricity safety materials. Local representatives were trained in special leadership courses and were employed to distribute bills, collect payments and watch over the security of the network. Small service offices were opened inside the favela and barrio communities. The more successful test pilot programs were rolled out across the region. The result was that losses from energy theft were reduced by more than $35 million in 2006 as more than 100,000 low-income customers were added to billing rosters and 165 barrios were approached with innovative solutions. At the same time, overall customer satisfaction improved as measured by independent third-party surveys conducted in Brazil by the Brazilian Association of Electric Power Distributors and in the rest of Latin America by the Regional Electric Integration Commission. During 2006, AES’s generation plants in Latin America improved their availability from 85 percent to 89 percent and increased their net generation by 8 percent. This increase is the equivalent of the energy consumption for one year of 900,000 of our average customers. These results were largely due to a systematic approach of sharing knowledge, technology and key people across the countries and companies of the Latin American region. The company is now growing rapidly in the region, with three new plants under construction in Chile and one in Panama. One area of focus for future growth will be run-of-the-river and small “micro” hydro facilities of less than 50 megawatts. AES already owns and operates thousands of megawatts of hydro facilities in the region and has operated small but successful biomass plants in Chile. We will be exploring other alternative energy opportunities in the region as legislation makes them increasingly attractive. Any multinational company that seeks to enter the Latin American market must adapt to each country’s particular cultural, social and economic realities. A major component to AES’s approach has been its engagement with the local community: Some of our Andres Gluski photo By david KatzEnstEin aes 2006 revenues 2006 profits Assets Employees aes latin america 2006 revenues Assets Employees Customers $11.6 billion $204 million $31.2 billion 30,000 $7.2 billion $14.2 billion 11,978 8.3 million companies have tens of thousands of local shareholders and are listed on the local stock market. Prominent local academics and business people serve on these companies’ boards of directors and the companies are engaged with local financial institutions. More than 99 percent of all employees are local and we are committed to developing local talent at all levels and have important partnerships with local universities. Finally, AES companies are large consumers of local industrial products, from cable to high-tech equipment and engineering services. AES has built a sustainable model for success in Latin America on the foundation of providing high-quality electric services while promoting economic development for all levels. Andres Gluski, executive vice president and chief operating officer of AES, previously was president for AES Latin America for two years. www.energycentral.com E n E rgyB i z 17 http://www.energycentral.com
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